The reason behind these ETFs' outperformance is simple: Grain prices are rising on weather-related supply concerns, particularly in the U.S.

Weeks of torrential rains across the Midwest and South have swollen rivers, broken levees and flooded fields, leaving farmers from Indiana to Arkansas well behind on their yearly plantings.

A USDA report published earlier this week showed that only 67% of this year's corn crop had so far been planted, leaving just under 31 million acres left to plant. That's well below five-year averages, where 96% of the corn crop had historically been planted by this time of year.

Soybean plantings were below average too, with 39% of the crop planted compared with a five-year average of 79% for this time of year.

Record-breaking heat and drought conditions elsewhere in the world, even elsewhere in the U.S., have further increased supply concerns.

Trade War's Impact On Crops

For soybeans, specifically, the U.S.-China trade war has further complicated matters. Historically, China has been a significant importer of U.S. soybeans, but due to the tariffs, the country has held off on its usual purchases.

With demand down, farmers simply aren't planning to plant as many soybeans as they have in the past. Nor can they be assured that the crop they have planted will eventually find buyers.

Additional tariffs levied on Mexico—one of the U.S.' largest agricultural import/export partners—are likely to further impact supply and demand.

The situation has reached such crisis levels that the U.S. is bailing out its own farmers to the tune of $16 billion in disaster relief, including $14.5 billion in cash payments funded by income generated from tariffs.

Agricultural ETPs: Not Like Other ETFs

When it comes to agriculture, concerns about future supply and demand are often priced into futures contracts (as opposed to spot prices); hence why so many grain ETFs, which track futures or futures-based indexes, are popping right now.

However, investors should be aware that most commodity ETPs—including agricultural ones—aren't structured as familiar open-ended, '40 Act funds.

For example, WEAT and CORN are commodity pools, an older ETF structure designed to hold futures contracts on behalf of investors.

The main benefit of commodity pools is their more favorable tax treatment for short-term traders. Whereas open-ended funds are taxed according to how long they're held, commodity pools are taxed according to a time-agnostic "60/40 rule." As such, 60% of their gains will always be taxed at the lower long-term tax rate of 20%, no matter how long they're in your possession, while the remaining 40% is taxed at the higher short-term rate of 34.6%.

For traders holding these funds for less than 12 months, a commodity pool ETF will have a more favorable tax treatment than a traditional open-ended fund.